Sabre Corp (NASDAQ:SABR), a leader in the travel technology industry with a market capitalization of $1.52 billion, has entered into several significant financial agreements to restructure its debt, according to a recent SEC filing.
The newly issued notes are guaranteed by Sabre Holdings Corporation and certain Sabre GLBL subsidiaries, and they share first-priority liens on collateral with Sabre GLBL's Senior Credit Facilities and Secured Notes. The obligations under the 10.7% Secured Notes Indenture are secured by liens on substantially all personal property of Sabre GLBL and the guarantors, as well as all equity interests of Sabre GLBL held by Holdings.
Furthermore, Sabre GLBL also amended its credit agreement, exchanging $775 million of existing senior secured term loans for new term loans with the same principal amount but extended maturity and new pricing terms. Despite challenging market conditions, the company maintains impressive gross profit margins of 59.2%, according to InvestingPro analysis.
The 10.7% Secured Notes Indenture includes covenants that limit Sabre GLBL's and its restricted subsidiaries' ability to incur additional debt, pay dividends, or make certain investments, among other restrictions. However, these covenants will be suspended if the notes achieve an investment-grade rating.
In a related transaction, Sabre GLBL issued an additional $24.7 million in principal amount of the 10.750% Senior Secured Notes as part of a privately negotiated exchange with a holder of its 9.250% and 7.375% Senior Secured Notes.
This restructuring comes at a time when Sabre Corp is navigating the post-pandemic recovery in the travel industry and investing in technology to enhance its offerings. With EBITDA of $424.75 million in the last twelve months, the company shows operational resilience despite current challenges. The company's SEC filing underscores its strategic approach to financial management and the importance of maintaining a solid balance sheet for future growth.
In other recent news, Sabre Corporation reported a positive Q3 2024 performance with a 3% year-over-year revenue growth, reaching $765 million. Distribution revenue and Hospitality Solutions revenue saw increases of 5% and 7% respectively, while the company's Adjusted EBITDA for the same quarter stood at $131 million, marking a 19% increase from the previous year.
However, Bernstein downgraded Sabre's stock rating from Market Perform to Underperform, citing concerns about the company's heavy reliance on the slowing Global Distribution System business and the challenges posed by rapid technological changes in North America. The firm also noted Sabre's strained financial position, with a significant net debt exceeding $4 billion.
Despite a decline in IT Solutions revenue, Sabre maintains a positive outlook, focusing on strategic investments and cost management. The company's projections for Q4 2024 include an anticipated revenue of approximately $715 million and adjusted EBITDA of around $115 million.
For the full year 2024, Sabre expects a revenue of about $3.03 billion and an adjusted EBITDA of $515 million. The company also aims to achieve over $700 million in adjusted EBITDA and more than $200 million in free cash flow by 2025.
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